STOCKS NEWS EUROPE-DnB NOR drops after Baltic losses

Shares in Norway's DnB NOR (DNBNOR.OL), the first Nordic bank to announce second-quarter results, fall 3.5 percent against a 0.3 percent rise for European banks .SX7P after writing down the value of its Baltic operations. [ID:nLA357618]

DnB NOR has investments in the Baltic states through its 51 percent-owned DnB NORD.

"Costs were higher than expected, but only if one does not adjust for goodwill writedowns in DnB NORD. Recurring earnings were somewhat better than we expected," one analyst says.

DnB NOR affirms earlier loan loss estimates, but forecasts higher writedowns in the Baltic region than previously expected and lower in Norway.

"Most negative deviations are due to lower quality items. Nevertheless, we reiterate our view that the DnB NOR stock is vulnerable to any negative news given the share price rally since bottom," Carnegie says in a note.

"Thus, on the back of today's soft numbers we expect it to come further down today," the brokerage says.

Shares in DnB NOR plunged in 2008 but have risen more than 65 percent so far in 2009.

Reuters Messaging rm://richard.solem.reuters.com@reuters.net